Accessibility links

Breaking News

Ghana Seeks Debt Relief

FILE: A man holds a 50 cedis, the Ghana currency, note in Accra, Ghana, on December 1, 2022. - Ghana is battling its worst economic crisis in decades.

Ghana is poised to request debt relief via the G20 Common Framework program and has sought reassurances that the negotiations can be expedited before proceeding, sources told Reuters.

The crisis-hit country, which secured a $3 billion staff-level agreement with the International Monetary Fund (IMF) in mid-December, has been hesitating due to the long delays faced by other countries using the process, one source familiar with the government's thinking said.

The West African country must restructure its debt to get the final approval to access the IMF funds. In December, Ghana launched a domestic debt exchange and later said it would default on nearly all of its $28.4 billion of external debts.

Ghana's public debt was 467.4 billion cedis ($47.7 billion) in September 2022, of which about $4 billion was bilateral, according to the Institute of International Finance. Of that, $1.9 billion was held by Paris Club of creditor countries and $1.7 billion by China.

The source said Ghana had reached out to the Paris Club in December to ask for assurances that the Common Framework process, set up by the Group of 20 leading economies in 2020 in response to COVID-19, could be expedited.

If it received such assurances, the government would quickly sign onto the Common Framework, the source said, speaking on condition of anonymity.

A Paris Club official told Reuters that the group had received a letter from Ghana's government, but declined to give further detail.

Another source with knowledge of Ghana's debt restructuring said it was hard to see any other outcome for Ghana than signing up to the Common Framework as they have left themselves no other options.

Ghana's finance ministry did not respond to a request for comment.

The Common Framework, designed to allow for speedy debt reworks, has been widely criticized for its glacial progress. Chad, Ethiopia and Zambia signed up in early 2021. While Chad secured a deal with creditors in November, Zambia is still locked in talks. Ethiopia's progress was held up by civil war.

Only poorer nations are eligible to request a Common Framework treatment, which will lead to an official creditor committee being convened and negotiations that are supported by the IMF and the World Bank.

Alternatively, a country aiming to restructure can do so by negotiating individually with each creditor.